How can you find a great mortgage person?

[jpeyton]

I've heard plenty of horror stories of crooked mortgage people, but I've also heard about great ones.

If you've dealt with a great one, what were some of the things that were great? What are the signs that you're dealing with someone who is dependable?

[MaikoTsumi]

First thing, shop your mortgage for the best deals. The typical person only goes to one lender.

Second, in general crooked mortgage people exist to prey on unqualified mortgage seekers.  I don't think it should be on most peoples radar if you're a qualified buyer.  In other words, mostly desperate and/or uneducated buyers seek out the types of mortgage brokers that comprise the "horror stories" you've heard about.

[mrdebtbeard]

I am a mortgage broker so the first thing I can honestly tell you is that most of the crooked ones have been weeded out (or more aptly regulated out). There are so many restriction on how we make our money in the mortgage industry now and what fees can be charged that there is very little room for "ripping clients faces off". Having said that you have to realize that there are basically 4 categories of lenders.

Banks - Likely should be your last choice, they typically have the highest rates and the least experience with difficult loans.

Small mortgage broker shops - a single man or small team will have rates just slightly better than the banks (so they are usually a better option) and will likely have access to multiple wholesale lenders and a lot more experience so can place and structure much harder loans. If you are self employed, have challenged credit or are dealing with a wonky property then this is probably where you want to start.

Credit unions - are like banks in that you less likely to get great experienced loan officers and are going to be more restricted on what you can get done, but because of the tax advantages credit unions enjoy their rates are among the most competitive. Credit union rates however can vary wildly over time and may not always move with the rest of the market, in other words they'll be tied with banks sometime and beat everyone by a half a point in rate some times. I've seen pentagon federal credit union have some screaming deals occasionally, and yes everyone can get access to them not just government employees.

Deep discount cube farm online lenders - REALLY hit or miss, your customer service is going to likely suffer and god help you if there is anything the least bit hard about your loan but if you have low DTI high credit and are in general doing a vanilla loan then they will likely have the best rates bar none.

Lastly yes everyone needs to get a couple of fee estimates from a couple of different lenders and lay them down side by side and compare them. Going in to how to read a GFE is beyond the scope of a forum post, but I will tell you if there is anything even remotely complicated about your loan please don't make your choice only on price. Remember you get what you pay for. Interview them, spend 20 minutes over the phone with each of them or even an hour in their office, make sure they are knowledgeable enough to ask detailed questions about your financial situation, trust worthy enough to provide you a good education about the process and that they are looking forward to try and address potential roadblocks to your loan process ahead of time.

[Blindsquirrel]

 If you are in an area served by Union Savings/Guardian savings PM me and will give you a stellar fellow to deal with- he is a VP now but still writes loans and I have known him for 15 years. Their 250 refi deal is the bomb.

[jpeyton]

I like that breakdown. Thanks!

[sol]

There are no great mortgage brokers, only great mortgages. Buy the loan, not the salesperson.

In general a broker, like any salesman, wants you to take the worst deal he can get away with.   He'll tell you you're paying more for customer service or rustproof undercoating or whatever, but remember he's working for you for a month and you're paying for 30 years.  Shop the loan, not the person.

I've heard that line before about how new regulations have weeded out the bad actors and my experience getting a mortgage last May proved otherwise.  Brokers who tried to sell me that line were high pressure act now types and their rates were almost a full point higher than what I eventually got.

Brokers are middlemen.  They make money by selling you loans at a premium over what they would otherwise cost. Think of them like personal shoppers, maybe worthwhile if you're too busy to shop yourself, but not pretending they aren't making money off of you.

[Another Reader]

Sol:

You do not understand how brokers work.  They work with the wholesale side of banks, not the retail side.  Pricing to them is very different than the retail pricing to you at the local branch.  I have had many, many mortgage loans, and in most cases the brokers were cheaper.  You have to sort through them until you find a good one. 

The last time I refinanced my house, I did it through Wells Fargo, the existing servicer. The rate and terms were almost identical to the broker because it was a streamline refinance, with a lot less paperwork involved.  It would have cost more and taken a lot more paperwork if I had walked in off the street.  I could have gotten similar terms from the credit union, but they were incompetent at underwriting a complicated file.  Advantage here: the bank.

[sol]

I understand that mortgage brokers make money by selling me a loan of a particular type that is most profitable for the lender and worst for me.  Do you think they magically generate dollars to pay themselves?

It's a business like any other.  And a sales based business to boot.   Capitalism doesn't run on good intentions and fairy dust, but on profit taken out of somone else's wallet.

[dragoncar]

I think broker here is biased, as I just got the best rate with a national bank.  Broker didn't come close.  I really liked my loan officer because:

I could tell he was busy but kept in constant contact and knew his shit down cold.  When terminating a phone call, he would tell me the next steps, documents I need to send, etc. in micro machine man voice, and confirm with follow up email.  In short, there were no surprises.

Broker dude, how much do you make per loan?  My guy got me out with apr so low I don't know how they could afford his salary given the work he did closing the deal.

[Another Reader]

Brokers are middlemen.  They make money by selling you loans at a premium over what they would otherwise cost. Think of them like personal shoppers, maybe worthwhile if you're too busy to shop yourself, but not pretending they aren't making money off of you.

These statements show you clearly do not understand the mortgage business.  Of course brokers make money, and the part that's unfair to the customer is you don't get to see the complete basis of their pricing.  Some brokers are good, some prey on the uninformed.  The key point is that the price of the money to them is much less than the retail price of the money to you.  They add costs and profit.  Good brokers and what were previously referred to as the "cube farms" mark up the loan less and have lower overhead.

A "great mortgage" is any mortgage priced as close as possible to the wholesale cost of the money.  Oh, yeah, and one that the person selling it can actually get underwritten and closed.

[CanuckExpat]

I thought RedFin had good and simple explanation of the differences: http://www.redfin.com/home-buying-guide/choosing-a-lender-broker-or-correspondent-lender

Also, this may not be universally true, but it seemed close in my experience:

"If you want to get ripped off, go to a broker, and if you want incompetency, go to a bank"

Source:When to use a mortgage broker
Also from NYT: Choosing Between Mortgage Broker and Bank

Even if you end up with the best rate with a bank, that doesn't help you if they turn out to be incompetent and you can't close in time..

[Magpie]

Hands down best mortgage experience I ever had was with a credit union.  They offered the most competitive rate, lowest closing costs, I was assigned an extremely responsive and knowledgeable loan officer, and all paperwork was easy to understand and available in advance.  I refinanced with them 2 years later and it was a breeze.

[Poorman]

I understand that mortgage brokers make money by selling me a loan of a particular type that is most profitable for the lender and worst for me.  Do you think they magically generate dollars to pay themselves?

It's a business like any other.  And a sales based business to boot.   Capitalism doesn't run on good intentions and fairy dust, but on profit taken out of somone else's wallet.

What you are describing is actually illegal now under Dodd-Frank.  They can't steer you in a direction you don't want to go because it's more profitable for them. 

Also, Another Reader already said this but I'll try to reiterate:  The broker gets wholesale rates on the money and earns a living by marking it up to retail (what a bank would charge).  They get to keep the spread between wholesale pricing and retail pricing, but they normally charge the borrower the same rate or less than a bank would.  That's how they stay competitive.

Full disclosure:  I'm not a broker but work for one of the aforementioned "cube farms".

[arebelspy]

Some good discussion on what brokers can/can't do for you.

To get back to the original question: how do you find a good one?

My answer is the same as I answer pretty much any RE question of "How do I find a good X" (mortgage broker, Realtor, inspector,  contractor, etc. etc.): referrals.

Real estate is a people business.  Networking is huge, and the best way to find a good one is to ask other real estate investors who they'd recommend, and then interview a few.

I'd bet you'll find a couple of fabulous ones.